Friday

2012 Commentary: President Obama's Proposal to Curb Oil Speculation is a Savvy Political Move

Abstract:
President Obama’s proposal to curb oil speculation will likely not have any long term impact on pump prices. However, his plan might help him with the electorate, and, in the end, that is all that matters in November.

Earlier today, President Obama asked Congress to enact several measures which are aimed at curbing oil prices. His plan seeks to reduce oil speculation by forcing traders who buy on margin to hold more cash reserves and, per the Los Angeles Times, by "boost[ing] funding for regulators and increas[ing] penalties for market manipulators." While Obama's proposal is not likely to have any significant, long-term impact on oil prices, it is a savvy political move.

President Obama's plan for curbing oil speculation is unlikely to garner the Republican support it needs to pass through Congress. Per MSNBC, even if Obama's proposal were to become law, it might not have much of an impact on oil prices. Regardless, the president scored some important political points with today's speech.

As the aforementioned MSNBC article noted, Obama portrayed himself as a champion of middle-class interests with today's announcement. Men and women who are struggling to fill up their gas tanks due to the high pump prices will note that the president tried to do something to help them out. Many people might also applaud Obama for standing up to the oil industry and to Wall Street. Even though the elections are still almost seven months away, Americans are unlikely to forget about the president's plan; they will constantly be reminded of it by his re-election campaign ads.

The president can also use this opportunity to draw a strong contrast between himself and Republicans. As previously mentioned, the latter group will almost certainly oppose the plan to curb oil speculation. Obama can rely on this fact to help him portray Republicans, and especially Mitt Romney, as out of touch. He can argue that their refusal to pass his legislation is indicative of their support of big business over the interests of Main Street. The President would especially benefit from any protracted Congressional battle over his proposal, as it would keep the topic on the media's radar for a longer period of time.

President Obama's proposal to curb oil speculation will likely not have any long term impact on pump prices. However, his plan might help him with the electorate, and, in the end, that is all that matters in November.